#SSIRInstitute September 12-13, 2017 #SSIRInstitute

Laurie Michaels Founder Open Road Alliance Twitter: @OpenRoadTweets

Preparing for Risk…and its Reward

Additional Participation from: Michael Madnick Fund Director Open Road Alliance

Jesús Gerena Chief Executive Officer Family Independence Initiative Twitter: @FIINational, @jcgerena

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Introduction to Risk Management Laurie •  About Open Road •  About Risk – Funders & Non-Profits

The FII Perspective Jesús •  Risk and its rewards •  Practical Considerations for non-profits

Q&A and Discussion Laurie, Jesús, Michael

Session Outline

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About Open Road Alliance

•  A philanthropic initiative founded in 2012

•  Provide grants and loans – over 100 to date – to projects that encounter mid implementation, unexpected challenges that place impact at risk

•  Engage in education and advocacy to encourage adoption of risk practices by funders and non-profits

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Risk Taxonomy – What Are We Talking About?

$  

Reputa'on    

Impact  Governance    Financial  

Today we are talking about risk to Impact.  

Risk is the likelihood that an event will occur that will change the planned trajectory, either for better or worse.  

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20%  1

5  in

FREQUENCY OF RISK EVENT % OF PORTFOLIO AT RISK

Risk In The Social Sector – Data

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DON’T BUDGET

87%  

DON’T ASK

76%  

DON’T HAVE POLICY

65%  

Risk in the Social Sector – Funder Data

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FIND ALTERNATE FUNDING

35%  

HAVE NEVER ASKED

51%   46%  

Risk in the Social Sector – The Non-Profit Response When Things Go Wrong…

HAVE A POLICY ABOUT ASKING

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Risk in the Social Sector – Key Findings from Data •  Disruptions requiring additional funds (i.e., contingency funds) are common and expected •  (1 in 5)

•  Funders and non-profits rarely address risks before they happen

•  When contingency funds are needed, most funders report having operational and financial capacity to respond. When asked, the 58% of funders do approve

•  Funders have financial capacity for contingencies but often lack processes or explicit budgets for this purpose

•  Grantees are hesitant to communicate with funders about potential obstacles

•  Funders do not accurately perceive the impact risk has on projects, or how non-profits address unforeseen events

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Risk Culture & Risk Management

SUBJECTIVE

RISK CULTURE

•  Define and describe your risk profile

•  Determine what choices you want to make

•  Integrate risk into your organizational culture

OBJECTIVE

RISK MANAGEMENT

•  Internal governance

•  Budgeting processes

•  Communications

Appetite or tolerance for risk Steps to prevent negative or harmful consequences in the face of existent risks

Create and incorporate risk mitigation practices into:  

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Risk Management – Risk Assessment Cycle Four Steps in the Process

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Reflections from a Nonprofit •  Risk and its rewards

•  Harnessing risk

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The Family Independence Initiative (FII) Experience •  The FFI model and resulting risk profile

•  When risk leads to reward: a case study

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FII’s Approach: Trust and invest in families

$20,000 $38,040 $100,065 $61,720 Household Income (quintiles)

Ben

efits

N

umbe

r of

hous

ehol

ds

Federal Poverty Line

UpTogether Fund Resources and dollars available based on proven initiative

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Practical Considerations for Turning Risk into a Positive •  MVP (Minimum Viable Product) •  Learning as an organizational value •  Fail Fast •  Building a culture of risk •  Clear, consistent communication

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Suggestions for discussion... •  Candid conversations with funders keep impact on track – what can all of

us do to make this more commonplace?

•  Scenario planning – forecasting what is likely to change in the next year – commonplace or a luxury?

•  Program and operating reserves to keep impact on track – how to budget for, ask for…and receive?

•  What non-profits do, and might do more or less of to plan for and mitigate risk…

#SSIRInstitute September 12-13, 2017 #SSIRInstitute

Laurie Michaels Founder Open Road Alliance Twitter: @OpenRoadTweets

Preparing for Risk…and its Reward

Additional Participation from: Michael Madnick Fund Director Open Road Alliance

Jesús Gerena Chief Executive Officer Family Independence Initiative Twitter: @FIINational, @jcgerena